The Financial Reporting Council today publishes its report on Promoting Audit Quality following the discussion paper that it published in November 2006. This report contains a summary of the responses and feedback it received. The report also outlines the approach the FRC proposes to take in response to the issues raised in this feedback.

Notwithstanding that many respondents to the discussion paper thought that financial reporting in the UK currently operates effectively and that audit is fundamentally sound, most respondents welcomed the FRC’s initiative in issuing ‘Promoting Audit Quality’ at this time. They also noted that the FRC has an important role in supporting confidence in audit quality in the UK and that the FRC’s actions would influence the ongoing viability of the profession.

The discussion paper was generally considered to cover the main drivers of audit quality and the main threats to them. The drivers of audit quality have been developed into a framework that is being published as part of the report on Promoting Audit Quality. This framework is intended to be a dynamic concept that will be updated as and when appropriate.

The FRC is not proposing any additional regulation as a result of the issues raised, believing that a well informed market is the best regulator. However, there are various projects currently in progress examining a number of the issues raised and a new task force will be convened to examine the issues surrounding the way audit fieldwork is undertaken.

The feedback paper can be viewed at: http://www.frc.org.uk/about/promotingauditquality.cfm  

The 37 non-confidential responses can be viewed at: http://www.frc.org.uk/about/promotingauditqualityresponses.cfm  

1. The Financial Reporting Council (FRC) is the UK’s independent regulator responsible for promoting confidence in corporate reporting and governance. Its functions are exercised principally by its operating bodies (the Accounting Standards Board, the Auditing Practices Board, the Board for Actuarial Standards, the Financial Reporting Review Panel, the Professional Oversight Board and the Accountancy and Actuarial Discipline Board) and by the Council. The Committee on Corporate Governance, whose members are drawn from the Council, assists it in its work on corporate governance.
2. All press enquiries should be directed to: Jon Grant, Executive Director of the Auditing Practices Board, telephone 020 7492 2410, or Paul George, Director of Auditing, telephone 020 7492 2340.